The mutual said an internal investigation identified 7,669 borrowers who had been charged interest up until the end of the month of redemption.

This was against the terms and conditions of those mortgage products and interest should only have been charged up until the date of redemption itself.

West Brom said it would fully reimburse all borrowers the amount charged plus interest. This will cost the mutual up to £2m.

Most of the affected mortgages originated from the building society’s direct channels between 2004 and 2007. A small number were acquired before this period by its specialist lending division, West Bromwich Mortgage Company.

The mutual said it had contacted the Financial Conduct Authority about the issue and had consulted the regulator on its refund plans.

West Brom chief executive Jonathan Westhoff said: “As a building society we always act in the interests of our customers and their needs and rights are of paramount importance to us.

“Overcharges have stemmed from a historical error originating some ten years ago, which we uncovered while investigating a recent service enquiry. We sincerely apologise to those people who have been charged incorrectly and are responding swiftly to restore them to their original position.

“We hope this action clearly signals our commitment to doing the right thing by our customers and always rectifying situations for them where mistakes have occurred.”

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